6. Stock Options

12 Months Ended

Dec. 31, 2014

Notes

6. Stock Options

6.           Stock Options

The Company has established a Stock Option Incentive Plan to authorize the granting of stock options up to 10 percent of the total number of issued and outstanding shares of common stock to employees, directors and consultants. Upon exercise of options, shares are issued from the available authorized shares of the Company.  Option awards are generally granted with an exercise price equal to the fair market value of the Company’s stock at the date of grant.

During 2013, the Company granted 990,000 non-qualified stock options to certain officers, directors and outside consultants with an exercise price of $0.09.  Shareholder approval for the award was granted on April 30, 2013.  

The options immediately vested.  Management valued the options as of the date of grant using a Black-Scholes option pricing model resulting in $89,038 expense being recorded.

The fair value of each option award was estimated on the date of the grant using the assumptions noted in the following table:

Stock price	$           0.09
Exercise price	$           0.09
Expected volatility	302.9%
Expected dividends	-
Expected terms (in years)	5.0
Risk-free rate	0.68%
Expected forfeiture rate	-

The following is a summary of the Company’s options issued under the Stock Option Incentive Plan;

	Shares	Weighted Average Exercise Price
Outstanding at December 31, 2012	2,000,000	$             0.27
Granted in 2013	990,000	0.07
Outstanding and exercisable at December 31, 2013 and 2014	2,990,000	$             0.34
Weighted average fair value of options granted during the year ended December 31, 2013		$             0.09

The average remaining contractual term of the options outstanding and exercisable at December 31, 2014 was 3.35 years. There were no options vested or granted during the year ended December 31, 2014. As of December 31, 2014 options outstanding and exercisable had an aggregate intrinsic value of $0.